Settlement Agreement

A settlement agreement is a legally binding document that settles any claims an employee may have against its employer to ensure a clean slate. They are used by employers and HR departments to resolve workplace disputes; usually, this process takes place when a contract is terminated.


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What is a settlement agreement?

Settlement agreements set out each party’s legal position regarding key areas such as compensation, confidentiality, post-termination restrictions, references, and more. If an employee signs a settlement agreement, they are giving up their right to bring a claim in the Employment Tribunal against their former employer. This means a settlement agreement is final and ends any potential dispute between the employer and employee. Each settlement agreement is different and reflects the unique relationship between the employer and employee.

How does a settlement agreement affect me?

Once a settlement agreement is signed, you will not be able to pursue any potential claims against your employer. Often, settlement agreements contain a full and final settlement clause whereby you agree to a lump sum amount and waive the right to bring any claim against your employer.

If your employer has offered a settlement agreement, you should seek expert legal advice on the terms of the settlement agreement at the earliest stage. It is essential you get a settlement agreement that is right for you.

You will want to ensure your Employer’s proposed settlement agreement is fair and reasonable given the circumstances. Important circumstances to consider are the strength of your claim if you went to an Employment Tribunal and how the agreement would impact your legal position.  You need a solicitor to sign your settlement agreement to confirm you have received independent advice. A solicitor is required to explain to you your legal position and rights under the agreement; this can include advising you on whether the redundancy payment is in line with statutory redundancy payment requirements, if the compensation is sufficient, if there are any outstanding claims not addressed by the agreement and whether you will retain any employee benefits. If you seek legal advice as soon as your employer provides you with a draft settlement agreement, we can negotiate on your behalf to ensure the settlement agreement meets all your needs.

 Our lawyers can provide advice on any potential claims you may have and provide expert negotiation to ensure that you are compensated for your employment termination.

What are the legal fees?

We do not charge our clients for advice on settlement agreements as our legal fees are covered by the employer. The amount your employer is prepared to pay for your legal fees is normally set out in the settlement agreement. If you wish to extensively negotiate your settlement agreement to get better terms, this may cost you extra depending on the length of negotiations.

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